British supermarket chain Morrisons has announced disappointing Christmas sales results. Despite the fact that the number of customers rose by 800,000 (+4.8%) per week, like-for-like sales went only up 0.7%; far worse than Reuters' analysts had expected (+1.3%) and a steep decrease from the third quarter's +2.4%.
Preliminary results indicate that Morrisons would have had the worst Christmas period of the 'Big Four' in the UK, while analysts had expected them to achieve the best results as they are not so dependent on the non-food products that Britons have learnt to avoid during the crisis.
"In line with the market"
The chain says to be rather happy with the results, as they “are in line with the market” and that it “had anticipated that 2011 would be challenging for the consumer and that [it] would be operating in a low growth sales environment.” The Board’s expectations for the full year remain in line with its original assumptions, stated the company.
CEO Dalton Philips said that “historic like-for-likes are around 3 per cent, but with consumer confidence so low and our prediction that it’s going to remain this low, we don’t think that we’re going to be reverting back to those sorts of like-for-like [figures] for some time." Consumers increasingly bought cheaper products: almost 40% of the products sold went out at a reduced price and one of the most popular product this year was sparkling wine: with sales going up +156%, many buyers clearly stayed away from the champagnes.
Analysts of Nielsen however suggested that Asda's strong festive period may have been a cause for Morrison's slower growth too: "given the reasonably high level of overlap with Morrisons it leads us to suggest that it has competitively impacted its Yorkshire-based rival." (http://www.guardian.co.uk/business/2012/jan/09/morrisons-christmas-sales-disappoint).
Fears for a bad 2012
For 2012, most analysts do not expect much improvement: despite the lower inflation, consumer confidence will remain low as many families will have a lower income, compared to 2011. Morrisons believes this could be good for them too, though: “Against this backdrop, our fresh, quality and value credentials continue to appeal to a growing customer base and we are well positioned to make further progress.”
Its CEO however is not as optimistic as its press statement: “I think it's going to be harder than the year we've just come out of. The economy is in a difficult place and wherever you look, you see this sort of lack of confidence."
Morrisons also declined to comment on the rumours that the group was interested in buying the 11 former Best Buy stores and converting them into their new Kiddicare concept. “We have ambitions for that business and we want to grow it, but we’ll update you when we’re ready,” said financial director Richard Pennycook.